NFL’s satellite broadcast arrangement may violate antitrust law

The 9th U.S. Circuit Court of Appeals ruled Tuesday that the National Football League may be violating antitrust law by effectively obliging its fans to purchase satellite subscriptions to view a Sunday's full slate of games or instead be left with limited local broadcast options.

Interlocking agreements between the NFL, its teams, and the satellite television provider DirecTV LLC grants the latter rights to all Sunday afternoon NFL telecasts, which DirectTV bundles and delivers to subscribers as part of a premium package plaintiffs claim is priced above its true market value.

The arrangement precludes the league or individual teams from exploring other broadcast options and, Tuesday's ruling declared, may thereby dampen competition for NFL telecasts in violation of Sections 1 and 2 of the Sherman Antitrust Act.

"Without this arrangement restricting the televising of NFL games, plaintiffs argue, the individual teams would create multiple telecasts of each game and would compete against one another by distributing telecasts of their games through various cable, satellite, and internet channels," Judge Sandra S. Ikuta wrote. "The plaintiffs' allegations on their face adequately allege an injury to competition."

The ruling, joined in full by visiting U.S. District Judge George Caram Steeh III and in substantial part by Senior Circuit Judge N. Randy Smith, reverses a dismissal U.S. District Judge Beverly Reid O'Connell rendered in 2017, and puts in jeopardy the broadcast arrangement that, for now, blocks fans from more flexible viewing options or from watching most out-of-market games without a subscription to the premium service, NFL Sunday Ticket.

"As a result of these agreements, fans who do not subscribe to Sunday Ticket have access to, at most, two to three local games each Sunday afternoon, in any given geographic area," Ikuta wrote. "There is no option for NFL fans to watch any of the other 7 to 10 games played each Sunday afternoon."

"Fans who want to watch other out-of-market games cannot purchase games individually or by team, but are required to buy the entire package of NFL games," Ikuta continued, noting that Sunday Ticket costs home viewers about $250 each season, while commercial subscribers -- such as restaurant and bar proprietors -- can pay up to $120,000.

The Sports Broadcasting Act, enacted in 1973, expressly exempts NFL broadcasting arrangements from the reach of antitrust provisions, but Tuesday's ruling cited a key limitation of that law -- which the panel referred to as the SBA -- namely that it only applied to over-the-air broadcasts, not those sent via cable or satellite.

"It is significant here that the defendants do not argue on appeal that the SBA applies," Ikuta wrote. "The interlocking agreements at issue are similar to those that have historically required an exemption from antitrust liability by the SBA."

Attorneys for the group of residential and commercial Sunday Ticket subscriber plaintiffs, led by Susman Godfrey LLP partner Marc M. Seltzer, commended the panel's ruling. In re NFL Sunday Ticket Antitrust Litigation, 2019 DJDAR 7581 (9th Cir. Aug. 13, 2019).

"We are very pleased by the 9th Circuit's decision," Seltzer wrote in an emailed response Tuesday. "We look forward to the next phase of the litigation."

In a partial dissent, Smith noted that the plaintiffs' attempt to seek damages for the claimed anticompetitive contracting was precluded by Supreme Court precedent, because their harm was caused indirectly by the league's broadcasting decisions. Smith otherwise joined the majority's decision.

Attorneys for the defendants did not respond to inquiries by press time.